Wednesday, January 28, 2015

Mommy Budget 101!

The Headlines:

Here are 5 tips to Make More Money

Which is really more about managing it

Sorry, no get rich quick scheme here

But a bonus round - your kids can learn this stuff too!

Who wants to talk about this subject?  Ahhhhhh no one.  Money is a touchy subject.  Do you have it?  Is there a lot of it?  Not enough of it?  Is it being spent wisely?  Or... is it kind of "thrown" away?
When you grow up… (and possibly more importantly) when you have a family… the budget you keep becomes tied to the person you are.  Money matters.  It's the world, like it or not, that we live in.  When a family forms, things become expensive really fast.  It has been my experience that, sometimes at that point, wives turn to their husbands and say: MAKE MORE MONEY.  Seriously.  It's an actual phrase that some use as a directive to their spouse.  I have a friend whose sister in law (now ex-sister in law) wanted her husband to "make more money" and when he didn't she just ran up the credit cards, found another man, divorced her husband and left him with the mounting debt.  Unbelievable.  But it happens.  Sadly.

So this is a post that embarks on a subject people don't want to talk about but probably should: Living on a budget.  Living within your means.  (Almost) Everyone has to… this topic came up last year when I had two friends, both at the tame time, say to me that their husbands wanted them to "reel it in" a bit and they were scared out of their minds.  It was then I mentioned, unbeknownst to them, that I was on a budget.  They were impressed.  However, it was not a road either of them wanted to go down.  If they had budgets then they would be accountable.  But, then again, that's the point.

First of all, the fact that I'm writing about money is funny.  At least to BP (the husband).  I'm just not good with numbers.  BP does it all.  I am grateful for that since math was my absolute worst subject in school and, thankfully, I didn't even have to take it in college.  I could manage my own, very simple, money matters before marriage but once I got married complication crept in.  I slithered out.  BP now handles all the balancing and I'm completely okay with that.  But here's the thing: I'm not talking numbers here today, I'm talking management.  Money Management.

Here are 5 tips which will help you Make More Money (by managing it).

First things first...
1. Know Where Your Money's Going 

Start by writing all your monthly essentials down on some sort of a chart:  mortgage (rent), set healthcare costs, water bill, electricity, gardener, school tuition, savings, whatever fixed amounts that need to come out of the monthly dollars.  Do not include things likes groceries because the cost is variable.

Next, for one month spend like you normally do but this month keep all your receipts, every single one!  Get a manilla envelope and a piece of paper and list everything you spend during that time period.  I will tell you this… it's a lot more than one would think.  Groceries, clothes, trips to Target, lunch out, COFFEE, gas, it all adds up fast.  Your eyes may pop out of your head when you see it right there in black and white.   Get used to this, because it should continue when you set your real budget into motion.  More on that in a bit...

Now take your fixed cost of living and what you spent on all your receipts and see how that compares to what you pull in every month.  That's the moment of truth.  Because there might not be much left.  In fact, there could be a deficit.  Next, based on that…

2. Set Your Savings Amount.

This is not easy.  But it has to be done.  Carve out some money, after you pay "fixed bills" and before you set your monthly spending budget.  Not too much but enough.  You need to save for college, retirement and your "cushion"… which includes family vacations, christmas presents, major car expenses, stuff like that.  They're the things that pop up that don't have a place in your monthly budget but they still need to get paid for.. somehow.  This is how.  Please know, college, retirement (which is obviously often done via 401k) and your "cushion" each deserves its own "account" - they're that important - so treat them that way.   Once that's done…

3. Set Your Monthly Spending Budget.

Meaning, after "fixed bills" are paid and savings is taken out, what's left?  That now needs to be divided between the 2 spouses.  Do this according to however the family functions.  Mom buys all the groceries, she gets more money.  Who pays for sports, buys clothes, birthday presents?  It all comes out of one or both of those budgets.  I will admit at first I was afraid but I quickly embraced it.  During the month, write everything down and check it several times to make sure you're on track.  It may feel painful but you will get used to it.  It may even become a kind of game!  Hey, no one wants to pay 18 percent to a credit card every month as you "borrow" their money… it's just not smart.  I use my credit card only so I can keep all my purchases on one account, accumulate "points" ( it's basically "free" money) and to build my credit score (if you pay these cards on time and in full every month - scores rise).  So aim high.  Be strict.  Tighten the purse strings at first.  You can always give yourself a raise later.  Every time BP gets one at work, so do I!  After all that is said and done... start to live your life differently.  Nothing extreme.  Just changed.  Don't live for your budget but  

4. Live With Your Budget in Mind

What does that mean?  Just start thinking more about what you're spending money on everyday.  Instead of going out to coffee (and spending $8 after a coffee and cookie) invite a friend to your house.  It's not only cheaper, but in my case,  I love my house, I constantly decorate and change it so I want people to come over.  I always have bottled Frappuccino's in the fridge and cookies in the pantry.   It's my own little coffee house!  I also always think about what I NEED versus what I want.  It's a hard lesson to learn.  Our society is so, "I want it - I must have it - buy it now"  but is the super necessary?  Of course not.  I've been wearing the same workout/yoga clothes for a tad too long now - it was time to invest in more but I waited a while until I felt I absolutely needed some.  December was an expensive month!  I pulled the trigger on New Year's Day.  Yes, I'm far from perfect on this matter.  But I do think about my budget.  That's more than some people.

If you're doing all of the above… you're in good shape.  But the last thing I would advise is to communicate.   At the beginning of each year, for the past several years BP and I

5. Have a Yearly Financial Summit

It helps us get on the same page.  During that time, we decide what (or if) we'll be spending our major money on this year.  What projects, what trips, what remodeling or fixes?  Then, the designated money gets sent in that direction.  Where does this money come from?  That depends on your family.  Is there a "bonus" that comes in?  Tax returns?  Bottom line, the 2 spouses have to talk.  It's not a fun topic but with a little work and communication, in the end, you can Make you More Money - together!

Here's the bonus round:  if all of the above is happening and you had those expensive kids we talked about earlier?  Guess what?  They'll learn all this by osmosis.  Of course, you have to help the process a bit.  Here's what we did with our little girl at age 6… maybe 6 and a half.  We started holding her accountable too.  All that chore money and some family gifts coming in… she needed to budget. And not just through that bank account she has but knows almost nothing about.  That's just far too removed.  She needed something she could physically see and touch.  Like this.

One mason jar for College, one for Savings and one for Spending.  Kind of like Mom and Dad.  Every time she gets money she puts it where she wants.  But if she puts money in the College jar - we match it.  Oddly, from the beginning she started putting most of her money in that one.  How did hat happen?  I have no idea but one would guess - common sense?  Now don't get carried away, she puts money in her Spending jar and she buys herself a little something now and again… but she's learning the concept of money just how I hoped… naturally.  I always say

 Kids go where you go - not where you point.  

I think this plan has her heading in just the right direction.  Now if I could just get my son to stop losing his money.  I have NO IDEA where he got that from?!


  1. GREAT post...Money is tough to talk about and really is a source of "stress" for many families.... That being said, I believe our children pick up on our money even more reason to get it right!

  2. I love the idea of a college jar for my son as well.. I am going to start that.


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